Is Renewable Energy Cheaper? A Thorough Response

is renewable energy cheaper

Renewable energy may not be completely replacing fossil fuels just yet, but it’s undeniable that society is warming to the idea of using solar and wind power in place of coal. In some parts of the world, we’re already beginning to see the effects of such a paradigm shift. New U.S. Energy Information Administration (EIA) data predicts solar and wind energy will dominate America’s new generation in 2020, making up 76% of new generation and adding 42 gigawatts (GW) of zero-emission capacity, while coal and natural gas will dominate 2020 retirements with 85% of plant closures. In this article, we will respond to the question, “is renewable energy cheaper?”. So follow this new blog in Linquip to find out more.

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What Is Renewable Energy?

Renewable energy often referred to as clean energy, comes from natural sources or processes that are constantly replenished. Renewable energy is an energy from sources that are naturally replenishing but flow-limited; renewable resources are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time.
The major types of renewable energy sources are:

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  • Biomass
    • Wood and wood waste
    • Municipal solid waste
    • Landfill gas and biogas
    • Ethanol
    • Biodiesel
  • Hydropower
  • Geothermal
  • Wind
  • Solar

Is Renewable Energy Cheaper Than Non-Renewable Energy?

Fossil fuels dominate the global power supply because until very recently electricity from fossil fuels was far cheaper than electricity from renewables. This has dramatically changed within the last decade. In most places in the world renewable energy is increasingly cheaper than any new electricity capacity based on fossil fuels, a new report by the International Renewable Energy Agency (IRENA) finds. Renewable Power Generation Costs in 2019 show that more than half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plants.

The report highlights that new renewable power generation projects now increasingly undercut existing coal-fired plants. On average, new solar photovoltaic (PV) and onshore wind power cost less than keeping many existing coal plants in operation, and auction results show this trend accelerating – reinforcing the case to phase-out coal entirely. Next year, up to 1200 gigawatts (GW) of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV, the report shows.

Renewable electricity costs have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains, and growing developer experience. Since 2010, utility-scale solar PV power has shown the sharpest cost decline at 82%, followed by concentrating solar power (CSP) at 47%, onshore wind at 39%, and offshore wind at 29%.

Costs for solar and wind power technologies also continued to fall year-on-year. Electricity costs from utility-scale solar PV fell 13% in 2019, reaching a global average of 6.8 cents (USD 0.068) per kilowatt-hour (kWh). Onshore and offshore wind both declined by about 9%, reaching USD 0.053/kWh and USD 0.115/kWh, respectively.

Renewable Energy

Why Is Renewable Energy Cheaper Than Non Renewable Energy?

In two-thirds of the world, renewable sources of power are more affordable than carbon-based electricity. This shift represents a substantial victory for green energy. The reasons why renewable energy is cheaper now are as follows.

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  • Energy Subsidies

One of the leading causes behind the affordability of wind and solar energy is government energy subsidies. To combat climate change, many governments offer consumers and businesses subsidies for using sustainably-sourced power. These monetary incentives reduce the end cost of choosing renewable energy sources.

Even if a sustainable source of energy costs more upfront, it may be cheaper in the long run. By subsidizing renewables through tax breaks or direct payments, governments pay back a portion of these initial costs. The result is a reduced overall economic impact on consumers who invest in green energy.

  • New Technology

As more people have adopted or invested in solar and wind energy, they’ve funded research in these areas. More studies have led to the creation of more efficient technology, which makes renewables more affordable. Wind and solar energy are technologies, not fuels, so as science improves, they get cheaper.

Environmental factors like solar radiation can cause product failures, so renewable energy technologies need to be resilient. Balancing resilience and efficiency was an issue for earlier machines, but that’s not the case anymore. Modern green tech is cheap to produce, durable, and harnesses more energy.

Fossil fuel technologies may increase fuel efficiency, which makes them cheaper, but that’s not the only factor. Even with cost-effective means of using fossil fuels, users still have to buy fuel. No governments or organizations control the supply of sunlight or wind, so advances in green tech have a more significant influence.

  • Market Volatility

Fossil fuels are subject to market volatility that’s not present in the sustainable energy industry. Unlike renewables, fossil fuels don’t necessarily become cheaper over time. These energy sources are finite resources, and various companies and governments control their supply, creating a volatile market.

Both crude oil and coal have undergone several price hikes in the past few decades. The price of renewables, on the other hand, consistently trends downward. Overall, fossil fuels are becoming more expensive while the opposite is true of renewables.

Fossil fuels aren’t always expensive. Recently, crude oil has seen a massive price drop, but it won’t remain this cheap. If historical trends are any indication, the price will eventually rise again, unlike wind and solar energy.

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Is Renewable Energy Cheaper Than Nuclear Energy?

Renewable energy is both cheaper and reduces emissions faster than nuclear power even from existing nuclear sites, according to the World Nuclear Industry Status Report, by French industry consultant Mycle Schneider.
According to the report, new renewables plants built in countries with nuclear generation can compete economically, not just with new nuclear plants, but also with existing facilities

Is Renewable Energy Good For The Environment?

Renewable energy may be a better option for emission than fossil fuels, but they are not completely free from pollution. Many renewable energy forms or their manufacturing processes emit greenhouse gases like particulates into the air, carbon dioxide, or worse, methane. It is partly because the resources needed for renewables are built using fossil fuels.

Still not every renewable resource is clean such as biomass that burns organic matter directly into the atmosphere.

Advantages Of Renewable Energy

There are some benefits to renewable energy that are as follows.

1. Renewable Energy Is Eco-friendly

Renewable energy is considered clean energy since it doesn’t cause grave environmental pollution, and it has low or zero carbon and greenhouse emission.

The use of renewable energy dramatically reduces the dependence on fossil fuel as a source of energy, hence, cutting back on air pollution.

2. It’s a Renewable Resource

Renewable energy is sustainable which implies that it does not deplete over a lifetime, and there is zero possibility that they will run out. While sources of energy like fossil fuels (oil, gas, and coal) are considered limited resources, and there is a strong possibility that they will run out in the future.

Renewable energy can help developing countries from over-reliance on fossil fuels.

Powerful winds, heat emanating from beneath the earth, sunshine and moving water can guarantee a huge and steady energy supply to a nation for many years.

3. Renewable Energy has Stabilized Global Energy Prices

Change up to renewable sources of energy means the stability of energy prices across the globe. This is because the cost of renewable energy depends on the initial cost of installation of renewable energy technologies as opposed to fossil fuels, which increase and decrease depending on the current inflation and availability of the resource. Respective governments would only need to cater to the initial costs, and that’s it.

4. Renewables Save Money and Profitable

Renewable energy helps in saving money in the long run. You will save not only on maintenance costs but on operating costs as well. As you’re using a technology that generates power from the sun, wind, steam, or natural processes, you don’t have to pay to refuel.

The amount of money one saves using renewable energy can vary depending on a number of factors, including the technology itself. Generally, transitioning to renewable energy means roughly hundreds to thousands of dollars in savings.

Renewable Energy

Disadvantages Of Renewable Energy

Renewable energy has some drawbacks that are as follows.

1. The Electricity Generation Capacity is Still Not Large Enough

There are still challenges to the generation of large quantities of power in renewable energy technology compared to traditional forms of energy generation like fossil fuel. Fossil fuel still produces large quantities of electricity today, by far. This, essentially, means that it can’t be solely relied upon to power the whole nation.

2. Renewable Energy Can be Unreliable

Renewable energy technologies totally depend on the weather (e.g., sun and wind) to be able to harness any energy. In case atmospheric conditions are not good enough, renewable energy technologies would lack the ability to generate any electricity.

  • Hydro generators require enough rain to fill dams for their supply of flowing water.
  • Wind turbines require wind blowing, at least with minimum wind speed, to move their blades.
  • Solar panels need clear skies and sunshine to get the heat required to generate electricity, and at night it isn’t collected.

3. Low-efficiency Levels

Renewable energy technologies are still significantly new to the market, meaning, they still lack the much-needed efficiency. Lack of sufficient knowledge on how to effectively harness these forms of energy makes the installation and maintenance cost for such facilities quite high. This poses forecast problems, and investors may shy away from investing their money for fear of not getting returns pretty quickly.

4. Requires a Huge Upfront Capital Outlay

Setting up renewable energy generation facilities requires a huge financial outlay. The installation of wind turbines, solar panels, and hydroelectricity plants is relatively expensive. These plants require upfront investments to build, have high maintenance expenses and require careful planning and implementation.

Also, the electricity generated needs to be delivered to towns and cities, which means additional cost of installing power lines.

5. Expensive Storage Costs

We often overlook the storage cost of renewable energy. In case of renewable energy, you must store the energy collected having a battery installed or else you will lose it.

The overall storage cost for the energy is about 9 cents per kilowatt-hour; however, the cost of the battery is upfront. That means $10,000 to $25,000 upon installation just for the battery.

The Bright Future of Renewable Energy

Solar and wind energy may not be a long way from becoming a standard power source. These trends mean that renewables aren’t just the more environmentally-conscious choice, but they make more economic sense as well. As technology continues to improve and more authorities invest in renewables, they’ll become cheaper across the globe. The price drop in renewables isn’t a momentary fluke. By nature, these resources will continue to grow more affordable, regardless of what the fossil fuel market does.

So, now you know the answer to the question, “is renewable energy cheaper?”. If you enjoy this article in Linquip, let us know what you think by leaving a reply in the comment section. We will be more than glad to have your viewpoint on the article. Is there any question we can help you through? Feel free to sign up on our website where our experts are prepared to provide you with the most professional advice.

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2 thoughts on “Is Renewable Energy Cheaper? A Thorough Response”

  1. Annika @ caynergy

    Renewable energy is both cheaper and reduces emissions faster than nuclear power even from existing nuclear sites, according to the World Nuclear Industry Status Report.

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